3 Easy Steps to Becoming a Money-Saving Whiz in College

College is the perfect time to learn new languages, discover new passions, and form new habits. And there are few habits your future self will thank you for more than becoming smart with your money and spending habits.

Learning how to curb your spending, start saving, and plan for retirement are money skills everyone needs, and the sooner you master them, the better. So start now, because, as a college student, you have the most precious asset available to you: time.

1. Cut spending

Before you can start saving, you need to cut your spending. And before you can cut your spending, you need to figure out where your money is going. Take a couple of months to track your spending and see if there are any problem areas: Is your Amazon account out of control? Are you addicted to subscription boxes? Are you going out for dinner every day that ends in Y?

Most college students (okay, most people in general) don’t know how much they’re really spending until they see the cold, hard numbers. It’s also easy to forget about the little expenses that add up to create a huge drain on your wallet.

After you know where you need to cut your spending, you can then create a budget based on your needs, wants, and future goals. You can use a simple spreadsheet or set up a budget on Mint.com that will alert you when you’re close to reaching your spending limit.

2. Start saving

Your first step to saving in college should be to set up an emergency fund, which will help you face any minor issues that may arise, like a speeding ticket, flight for a family emergency, or new tires for your car. In college, an emergency fund of $100–$500 may be sufficient for almost anything that comes up.

Then, you should start saving for other goals, such as a security deposit for a new apartment, travel to job interviews, or moving expenses for after graduation. You can also save for living expenses for a post-college internship, a trip to Europe, or a larger rainy day fund.

An easy way to establish saving habits is to make it automatic. If you have both a checking and savings account, you can schedule automatic transfers every month to your savings account. Then, when you need to pay for an emergency, you’ll just transfer that amount back to your checking account.

3. Start a retirement fund

Imagine a couple of decades down the road—when you’re retiring 10, 15, or even 20 years earlier than all of your friends. It’s not so crazy if you start planning your finances and saving now.

Why start saving for retirement while you’re still in college? Putting in a small amount of money while you’re in your 20s almost always works out better than putting in more when you’re older. Even if you only put in $25 or $50 a month, you’re starting the practice of saving.

And although your main concern is probably finding a job after you graduate from college, there’s no reason you can’t start saving for retirement too. College students who are earning money from a job can open and contribute to a Roth IRA, which is a special type of long-term savings account where you pay taxes on the money upfront and not when you make a withdrawal. (Just make sure that you only put away money that you won’t need anytime soon. If you decide to withdraw money from the IRA ahead of schedule, you’ll have to pay early withdrawal fees on it.)

In any case, creating a retirement account now and making regular contributions, no matter how small, will help you develop an overall financial attitude that will last forever. This way, you’ll graduate from college with a degree—and a firm financial future.

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